Submission by the Australian SBT Industry Association (ASBTIA)

to the

Productivity Commission Inquiry into the Regulation of Australian Marine Fisheries and Aquaculture Sectors (2016)

Content of submission

Range of submission

Summary – general points

Changes in (wild) fisheries management in Australia

Where the PC can add value - Continuing issues in (wild) fisheries management

Changes in aquaculture management in Australia

Where the PC can add value – our experience with aquaculture regulation in South Australia

Specific issue – charter and recreational SBT catch

References

Note: A confidential paper is submitted separately on the Economic Structure of the Australian Southern Bluefin Tuna industry.

Range of this submission

We attempt to identify the areas that we think the PC can make a significant contribution. However, we have not gone into detail in areas that:

(1)We have no specific expertise (eg aquaculture regulation outside SA; egand why TAC’s are being substantially undercaught in Commonwealth south-east fisheries). We assume others will submit all the detail (eg SA aquaculture regulations from the SA Government).

(2)We have identified the issue, and have left it to the PC to pursue if they also think it fits the Terms of Reference.

Summary – general points

Australia is part of the fastest growing population and income area of the world whose preferred discretionary expenditure is often seafood. How can Australia maximise that opportunity in an ecologically and economically sustainable way?

The SBTindustry welcomes the PC Inquiry as an opportunity to identifythe next necessary steps in management of Commonwealth and State fisheries and State aquaculture - to achieve seafood’s potential national and, particularly regional contribution.

Major progress has been made in the last decade, especially in management of wild fisheries. In general, fisheries are much more ecologically and economically sound – and this needs to be recognised as the platform for the next steps.

In aquaculture, the regulatory approach and the economic performance aresometimes also much improved since the last PC assessment in 2004. However, there remain significant barriers in some States to sustainable progress to achieve the efficient regulatory framework described by the PC in 2004. Tasmania and SA may be good case studies.

In both wild fisheries and aquaculture, there are examples in Australia and overseas of best and worst practice, and these need to be highlighted by the PC.

This submission partly reflects the experience of Southern Bluefin Tuna (SBT) – which:

(1)Was the first Australian fishery to adopt ITQ’s (in 1984), on the recommendation of the then Industries Assistance Commission (IAC 1984). Experience has shown that ITQ’s are generally the best way to manage a single species fishery, as long as the access security is recognisedlong term. This will now be testedin SBT because of the charter and recreation catch increasing rapidly outside the Total Allowable Catch (TAC), as the cuts in the commercial TAC produce a stock recovery.

(2)SBT is managed by three different jurisdictions – the growout (aquaculture of wild-caught Bluefin) by a State Government, and wild fishing by an RFMO, and by AFMA and DAWR. We see the current situation as the best balance for an international species with onward growout.

(3)SBT has made the shift to high value adding, and for export. We submit that ranching SBT is a high level of natural resource utilisation because:

-What we are doing is annually re-locating 300,000 Bluefin from a low productivity environment in the wild (natural mortality of 20-30% pa and feed conversion ratio (FCR) of 5:1 (?) dry wt) to a high productivity environment in farms (natural mortality of 1%pa, FCR of 2.5:1 dry wt from sustainable feed sources, and doubling the weight in 6 months from maximising seasonal growth).”

(4)SBT interacts with the whole spectrum of Commonwealth and State Agencies – including DAWR Fisheries Policy, Biosecurity Australia, NOPSEMA, FWA, APVMA, AFMA, AMSA, PIRSA, DAWR Animal Health, Commonwealth and State Environment Departments, and EPA in SA. This provides wide experience in the efficiency of regulation.

The industry also interacts with Agencies in Japan, China, and other export markets.

(5)Because SBT mostly operates under RFMO rules, government intervention is much greater, and with less scope for co-management. Therefore, the importance of efficient regulation is even more important in SBT.

Changes in (wild) fisheries management in Australia

In the last decade the quality of fisheries management (wild stocks) in Australia has been transformed to be among the best in the world in stock sustainability. The reasons are a conjunction of positive changes:

(1)The formal adoption of stringent harvest strategies in 2006 by the Commonwealth, and largely followed to varying degrees by the States. This is reflected clearly in the Status Reports (Patterson 2015; FRDC 2014). In the United States, the 2006 amendments to the Magnusen-Stevens Act have had a similar effect.

(2)For data-poor fisheries, the development of Ecological Risk Assessments (ERA’s) to manage by tiered risk.

(3)Australia’s competitive advantage in fisheries stock assessment and other science. Groups such as CSIRO, ABARES(and in SA – SARDI) are global centres of excellence. Many government agencies are very good at implementing the science.

(4)Much of (3) would not have occurred without the influence of the Fisheries Research and Development Corporation (FRDC) which has made a major contribution to most outcomes in Australian seafood.

(5)The widespread adoption in Australia of TAC’s and ITQ’s (see (6) below) has made a major contribution to ecological sustainability. This is equally correct globally – for example, for tuna and billfish:

-“When we take a look at the rate of change over the last 10 years, the biomass of TAC-managed stocks is increasing, and fishing mortality is declining, unlike those managed by input controls or with no controls.” (Pons et al 2016).

(6)The adoption of Individual Transferable Quotas (ITQ’s) in almost all the major fisheries in Australia (Rock Lobster, Abalone, Tunas, Small Pelagics) and equivalent effort input units in prawn fisheries. Even in significant multi-species fisheries such as the South-East fisheries, ITQ’s have substantially improved management, even if with teething issues. This correlation between secure access rights and successful stock outcomes is emphasised in a 2016 study (Costello et al) which found:

-“The analysis suggests that implementing reforms such as those based on secure fishing rights are critical to providing the combined benefits of increased fish populations, food production and profits. "Fishing rights" is a fishery management approach that ends the desperate race to fish by asking fishers to adhere to strict, science-based catch limits in exchange for a right to a share of the catch or to a traditional fishing area.”

(7)All the changes have no doubt been made easier by often buoyant market conditions for Australian catch, particularly export product. This has assisted the transition (allocation) to ITQ’s, and in key areas (eg Western Rock Lobster) to adoption of Maximum Economic Yield (MEY).

(8)At the Commonwealth level, the combination of a Statutory Authority and a policy Department has produced a better mix of fisheries management.

(9)Increasingly, management of fisheries is more flexible – for example, in SBT the provisions to carry back and carry forward quota from/to the following year.

(10)We conclude that the disciplines in the EPBC Act have, in net terms, benefitted fisheries management. The Act has been applied in a constructive way – for example, Conditional Approvals, and insertion of the Conservation Dependent category into the Act. The question now is whetherthe improved quality of fisheries management elsewhere means the overlap between the EPBCand Fisheries Management Acts needs to be fixed.

(11)The large majority of fisheries management decisions are now based on scientific inputs rather than on political-social considerations, although political decision-making remains a problem in a number of States, and in the Commonwealth Small Pelagic Fishery.

(12)There has been a much greater emphasis by managers and industry on ecosystem management,particularly to address bycatch of at-risk species. Most often, hard decisions are now being made. In Commonwealth fisheries, this ranges from seabirds to sea lions.

(13)Some States have shown the way on formal resource-sharing – eg in most State Rock Lobster industries, and in inshore finfish fisheries in States such as SA.

(14)Where there has been resource access re-allocation, most jurisdictions have recognised in some form or another that existing rights holders should be compensated (called fisheries adjustment). This re-allocation has ranged from the creation of closed zoning for ecological reasons (egMarine parks) or re-allocation to increase recreational access (eg Port Phillip Bay in 2015).

(15)The 2006 Commonwealth fishery adjustment Program of $240 million. Although significant errors were made in the Program, it still made a real difference to Commonwealth fishery economic viability and so made ecological adjustment easier in those which benefitted from the Program.

(16)A number of RFMO’saffecting Australia have operated much better – for example CCAMLR, CCSBT and the Western and Central Pacific (Tuna) Fisheries Commission (WCPFC) – although the WCPFC and Indian Ocean Tuna Commission still have to adopt formal harvest strategies.

Where the PC can add value - Continuing issues in (wild) fisheries management

There are remaining significant issues – and the PC can add value to resolving these. The issues include:

(1)Cost recovery: We support the Department of Finance (DOF) Guidelines on cost recovery of attributable costs, but the reality is that many smaller fisheries are paying a very high percentage of GVP in regulatory charges. This is unsustainable – and often leads to the requirement for restructuring assistance and relief. The only real enduring answer to this is strengthening of the secure status of the fishing right (see (2) below) to facilitate higher utilisation and investment in value adding. In other words – industry would have to put up or shut up (see (2) below).

(2)Access security: SBT is one example where the perceived higher status of the Statutory Fishing Right (SFR) has led to large investment in value-adding, and a rejection of any restructuring assistance. The industry accepts the ecological, economic and international fluctuationsas normal business risks – on the understanding that it is underpinned by the strength of the access right (see later section). This security is now in doubt and this needs to be addressed.

Again, the SBT industry has always accepted that the quid pro quo for property rights/secure access is no government subsidy. Even with the 67% quota cut in 1989-1990, the further 24% cut in 2009, and the difficult market conditions of the last 5 years – the industry has never sought or received government assistance. These quota reduction setbacks, largely caused by Japanese overcatch (Polacheck 2012), are normal business risks.

(3)Resource sharing: There are good case studies where the shares have been formalised, and where there is a solid foundation (eg marine finfish in SA; rock lobster in most States). However, in many States there is not even a charter or recreation licence and/or any formal resource sharing.

Many times in the past the Commonwealth committed to develop a resource sharing policy – for example see AFFA 2003 and Coolangatta 2002.

A major challenge is how to assess the added economic value of charter and recreational fishing – and the PC could add value by making an input.

(4)Low catch/TAC ratios in Commonwealth and some State fisheries: In total Commonwealth fisheries, only 50-60% of the TAC’s are being caught. This does not apply in Commonwealth fisheries such as SBT, Northern Prawn (TAE) and East Coast Tuna, but is a major issue in domestic market-driven fisheries in the South East(Green 2016; Skirtun& Green 2015), and especially in the West Coast Tuna Fishery. In some State fisheries (eg WA Rock Lobster) the undercatchingof the Potential Biological Removal (PBR) is because MEY is being applied (the optimum situation).

(5)Multiple jurisdictions:The PC Issues Paper emphasises the potential problem of having so many jurisdictions in Australian fisheries. In addressing this in a practical way, we submit that the PC might identify:

  1. How the recent ecological and economic gains in many Australian fisheries can be spread to all fisheries – eg Harvest Strategies (Sloan et al 2014), Ecological Risk Assessments, and MEY (where suitable).
  2. The ongoing OCS issues, including the economic cost, and a pathway to resolving them. The PC needs to highlight these – to accelerate solutions. We emphasise that the delays are often as much a fault of industry as much as government.
  3. What it costs to issue a licence in Australia now compared with the single jurisdiction in NZ.
  4. Other areas where cooperation between jurisdictions might produce more cost-effective outcomes (eg common licensing platforms, joint Vessel Monitoring Service (VMS); joint Electronic Monitoring (EM); joint E-logs.

(6)Adding value: A problem can arise when the husbandry issues in adding value to a basic fish catch require different regulations. Good examples are the shift from exporting (dead) lobster tails to live lobsters, and the change in SBT from harvesting dead fish at sea to capture/transfer of live tuna into growout pontoons. These require a different regulatory approach. The PC might consider other species where value can be added, if the regulatory structure was more flexible.

(7)Increasing productivity: A current example is the intense political and public debate over the trawler “Geelong Star” harvesting small pelagics. The realities are that:

  1. The TAC’s set for that fishery are set scientifically, are precautionary, and take into account the trophic impacts of harvesting (Smith 2015).
  2. Large trawlers able to catch and preserve significant volumes on board have high productivity and achieve higher quality product.
  3. A lesser number of boats catching efficiently are highly likely to be more ecologically friendly on incidental bycatch than a large number of operators.

The PC might assess this situation.

(8)Crew availability: Rightly so, Australia has very high regulated crew qualifications -and a boat can’t legally go fishing without formally qualified crew. During the peak of the mining/offshore gas boom a large number of these crews left fishing to go to these industries. This, combined with the reticence of Australian crews to go offshore, meant key offshore fisheries (not SBT) rely heavily on foreign crew under sponsored visas. The right to use these crews, at Australian remuneration rates, is a core part of the productivity performance of the industry.

The PC might assess this situation.

(9)Reducing research costs through technology and implementation of “Catch cost risk trade-off”: As mentioned earlier, Australia’s seafood research skills are world class, and give Australia a competitive advantage. However, for some fisheries, research continues to be a high proportion of their costs, particularly as public investment in fisheries research declines. Our questions are:

  1. In some fisheries this has been addressed by using new technology to drive down costs and/or get more precise results (often allowing higher TAC’s). SBT is a good example of that where CSIRO has developed genetic (DNA matching) to replace cost-intensive surveys. This may also be used to make State egg surveys more cost effective. What is the potential for wider use of these new technologies?
  2. If the catch/TAC ratio is low in some major Commonwealth fisheries, why is the application of the catch cost risk trade-off approach (Dowling et al 2013) not considerably reducing research costs?Note that this can also mean multi-year quotas and flexibility between seasons – and we know that in SBT these produce a much more efficient use of quota.

(10)Implementation of harvest strategies and ERA’s to State-managed fisheries– is this proceeding fast enough? National harvest strategy Guidelines have been developed (Sloan et al 2014), but what is the performance of States in achieving outcomes?

(11)Legislated economic Objectives - the Commonwealth Fisheries Management Act has a number of key economic Objectives –including (in Section 3):

’’(a)implementing efficient and costeffective fisheries management on behalf of the Commonwealth; and

(c) maximising the net economic returns to the Australian community from the management of Australian fisheries.’’

There is strong debate on what these mean in practice – and the PC could add value by making an input.

Changes in aquaculture management in Australia

What the 2004 PC paper did very well was provide all the data on regulations and licence costs so benchmarks could be set. Examples were:

(1)The cost of a licence/lease in each State.

(2)Number of Agencies and regulations involved in deciding on applications.

(3)The time it takes to get a decision on an aquaculture application.

(4)Integration with coastal management policies.

Unfortunately, these have never been updated by bodies such as the Australian Fisheries Management Forum (AFMF) and National Aquaculture Council (NAC). However, recent studies on development of aquaculture in Queensland have gone some way to updating them (CIE 2014; Queensland Competition Authority 2014).

It is difficult for a body such as ASBTIA to assess progress – because, like salmon in Tasmania, we operate only on one species and in one State jurisdiction. We can only compare through anecdotal experience – including regular requests to brief other States on why the SA regulatory structure seems to work relatively well.

Therefore, what we can best contribute is our assessment of the evolution of the aquaculture regulatory system in SA. In doing that, we partly address the possible issues in other States, and the comments made by the PC in 2004.

Where the PC can add value – Our experience with aquaculture regulation in South Australia

We regard the SA aquaculture structure as a competitive advantage. More specifically:

(1)A separate Aquaculture Act – which the PC covered in 2004, in the early days of the 2001 SA Aquaculture Act. We understand the points made in other States that the cost of developing and administering an Aquaculture Act (or Marine Planning legislation) separate from a core Fisheries Act, can be expensive. This was all addressed in SA prior to proceeding with an Aquaculture Act – including industry concerns about cost and duplication.